Timeline of Schwarzenegger's budget-reform efforts

Here is a timeline of Gov. Arnold Schwarzenegger's major budget actions:

- October 2003: Schwarzenegger rolls back an increase in the vehicle license fee, fulfilling a campaign promise, costing the state $4 billion in revenue that year. The loss is now estimated as high as $6 billion a year.

- March 2004: Schwarzenegger wins voter approval of Proposition 57, allowing the state to borrow $15 billion to close its budget deficit. Voters also approve Proposition 58, a companion measure that requires the Legislature to pass a balanced budget, prevents future borrowing to cover a deficit and allows the governor to declare a fiscal emergency if a deficit emerges in the middle of a fiscal year.

- January 2005: Schwarzenegger submits his California Performance Review to the Little Hoover Commission on ways to eliminate waste and streamline state government operations. Schwarzenegger dropped his plan to eliminate or consolidate dozens of boards and commissions a week before commissioners were expected to recommend against his proposal.

Commissioners were skeptical that the reorganizations would yield savings, while union and consumer groups viewed it as a loss of regulatory oversight.

- November 2005: The special election marked a low point for Schwarzenegger, whose four ballot initiatives lost overwhelmingly. Only one, Proposition 76 to control state spending, dealt directly with budget reform. The others addressed redistricting, union dues and teacher tenure.

- November 2006: Schwarzenegger and the Legislature turn their attention to infrastructure needs and persuade voters to pass propositions 1B-1E, securing $37.2 billion in bonds for road projects, affordable housing, levees and schools.

- August 2007: The Legislature hands in a budget two months past its deadline after Republicans held out for spending cuts. Turmoil in the housing and credit markets points the way toward recession and steeply declining state tax revenue, foreshadowing the annual budget crises ahead.

- January 2008: Schwarzenegger spent much of 2007 trying to overhaul California's health care market, but the plan is eventually killed in the state Senate over cost concerns.

- January 2008: As the state's economic condition deteriorates, Schwarzenegger begins the year with a call for a constitutional amendment to change the budget process. He wants to cap state spending using a formula based on the average growth rate from the past decade, with any excess revenue placed in a rainy day fund. He also calls for automatic spending reductions if the state's budget situation worsens after a budget is passed.

The budget package eventually approved by lawmakers did not include the reforms Schwarzenegger sought. The governor traveled around the state to promote his ideas but met resistance in the Capitol from Democrats. By May, Schwarzenegger dropped his campaign for a spending cap.

- November 2008: By a narrow margin, voters approve a Schwarzenegger-backed ballot initiative to change how state legislative districts are drawn. He says the change will lead to more moderate lawmakers being sent to Sacramento by making state Assembly and Senate districts less partisan. He believes electing lawmakers whose philosophies are more centrist will reduce budget gridlock.

- May 2009: Schwarzenegger goes to the ballot in a special election to seek voter approval for a series of budget-related changes he negotiated with lawmakers in February as they addressed what was then a $42 billion deficit. The ballot measures sought to extend temporary tax increases, impose a state spending cap, require a rainy day fund, let private investors take over the state lottery and redirect money intended for early childhood and mental health programs. Voters reject all but one - an initiative that prevents elected officials from getting pay raises when the state runs a deficit.

- September 2009: A bipartisan tax commission proposed by then-Assembly Speaker Karen Bass, a Los Angeles Democrat, and supported by Schwarzenegger turns in its plan to overhaul California's tax system.

The panel's goal was to design a system that would smooth out the fluctuations in state revenue, caused in large part by the state's reliance on high-income earners and capital gains taxes. The group suggested an overhaul that would eliminate the state's sales and corporate taxes, flatten the income tax rate and impose a "business net receipts tax" that would apply to all companies doing business in California.

A bill seeking to implement all the recommendations fails to pass a legislative committee.

- May 2010: In his final budget proposal, Schwarzenegger continues to call for budget reform. He backs proposals by a government-reform group, California Forward, that would grant the governor authority to cut spending midyear and extend the budget deadline by 10 days.

He also proposes a constitutional amendment that would automatically ensure that more general fund money will go to higher education than to prisons each year. The nonpartisan Legislative Analyst's Office says such a change would give the state even less flexibility to deal with future budget problems.

- October 2010: Schwarzenegger wins legislative approval to place a constitutional amendment on the March 2012 ballot to strengthen the state's rainy day fund by setting aside 10 percent, up from 5 percent, of revenue each year. The amendment would make it more difficult for the state to tap the fund by restricting withdrawals.

Even if voters approve the change, it will take years for the state to build up a reserve. Because deficits are projected for years ahead, the governor does not have to start making deposits for another three years.

- December 2010: Schwarzenegger calls a special session of the Legislature to address a $6 billion gap in the current fiscal year's budget he signed just weeks earlier. Democratic lawmakers who control the Legislature defer action until the new year, when Gov-elect Jerry Brown will take office.